Amazon threatens to cut its business with a cargo airline that delivers its packages if it can't reach a deal with frustrated pilots

Ted S. Warren/AP

• Amazon Air pilots are picketing the company's annual meeting Wednesday, warning that low pay and benefits are leading to higher turnover and potential safety issues.
• The union representing the pilots of three carriers says they've been without a contract since 2016 and that the companies are dragging their feet.
• Amazon, in response to a question from Business Insider, threatened to change its "allocation" of cargo if the issues are not resolved.

Since 2016, pilots who operate cargo flights for three companies on behalf of Amazon Air have been without a contract.

Now, in the face of more protests at the e-commerce giant's annual shareholder meeting on Wednesday, the company has threatened to take its business elsewhere if a new agreement between the pilots' cannot be reached.

The pilots, represented by the Airline Professionals Association, say the cargo airlines Atlas Air, Southern Air, and Air Transport Service Group - which are the three airlines that provide many of Amazon Air's daily operations - have dragged their feet on negotiating a new contract. As a result, the pilots say, staffing is being stretched thin and talented recruits are opting to fly for competitors instead.

In response to a question from Business Insider about those pilots' fears that more incidents, like the plane crash in Houston earlier this year, could occur due to short staffing and inexperienced pilots, an Amazon spokesperson said it may rethink its future investments and carriers.

"We are disappointed with the current state of relations between Atlas and their pilot union," a spokesperson said. "Neither side seems willing to work towards a reasonable compromise. This is contrary to the interests of Atlas, the pilots, and the customers they both serve. We repeatedly hear claims made by the union regarding Atlas's service for Amazon that when investigated are factually inaccurate.

"The continued inability of Atlas and their pilot union to resolve these negotiations could result in a change to the allocation of our current and future aircraft. We have an obligation to deliver to our customers, and so do they." (Emphasis ours).

Read more: An Amazon Air plane crashed in February, killing all 3 people on board. Weeks earlier, several pilots said they thought an accident was inevitable.

That sentence is key in Amazon's statement. In its agreement with Atlas, Amazon has the options to "at its discretion" place up to 15 more 737-800 freighter aircraft into service by 2021, according to regulatory filings. It's not clear exactly what changes might result from the company's allocation changes, but it could have a significant impact on Atlas' revenue and operations.

Pilots are skeptical that Amazon's relationship with Atlas and the other two carriers is on-paper only. In an interview with Business Insider, executive council chairman for Atlas Air's pilots' union, said he suspects the company plays a larger role in operations than it leads on.

"What Amazon is going to say is 'that's our contractor and we don't have anything to do with their operation,'" he said. "That's not true. They have a complete shadow flight operations system set up in the headquarters. They're exercising control and making an operational decision throughout the Atlas network."

An Atlas Air spokesperson accused the pilots of spreading misinformation.

"These protest efforts are common tactics that are often used by unions to spread misinformation and gain leverage in contract negotiations," the spokesperson said. "The fact is Atlas is committed to its pilots. We have an uncompromised commitment to the safety and well-being of our pilots - and our practices meet or exceed all regulatory requirements and industry standards."

Another pilot, Captain Michael Russo, said the company's statements to that effect won't deter efforts to fight for better pay and benefits in a new contract. After all, this problem has been around for years, and doesn't appear to be ending any time soon. Because of federal labor laws, pilots can't go on strike without presenting their case before a judge or being released by a national mediation board.

"Now, after several years of losing pilots to airlines like FedEx, UPS, and Delta, we find ourselves basically with a staffing crisis," he said. "We just have to keep shining light on the way that they're doing business and really trying to subvert as I said our legal right to negotiate and a new contract."